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Airline Stock Roundup: JBLU, HA, UAL, AAL

Zacks Equity Research

The past week saw key sector participants like JetBlue Airways JBLU, Hawaiian Holdings HA and Allegiant Travel Company ALGT announcing their respective first-quarter 2017 numbers. While Hawaiian Holdings outperformed with respect to both earnings and revenues, JetBlue and Allegiant reported mixed results. JetBlue reported better-than-expected earnings but lower-than-expected revenues. Allegiant narrowly topped top-line estimates but lagged bottom-line expectations.

On the non-earnings front, an American Airlines AAL flight came into the spotlight due to an ugly altercation between a flight attendant and a passenger. The incident comes close on the heels of the highly publicized passenger fiasco on board flight 3411 of United Airlines, the wholly-owned subsidiary of United Continental Holdings UAL.  As a possible fallout of the incident, United Airlines’ CEO Oscar Munoz is now no longer guaranteed to be the company’s chairman in 2018.

Transportation - Airline Industry 5YR % Return


Transportation - Airline Industry 5YR % Return

 (Read the last Airline Stock Roundup for Apr 19, 2017).

Recap of the Past Week’s Most Important Stories

1. JetBlue’s first-quarter 2017 earnings (excluding special items) of 25 cents per share beat the Zacks Consensus Estimate by a penny. Quarterly earnings, however, declined 57.63% from the year-ago figure due to higher costs. Operating revenues of $1,604 million fell short of the Zacks Consensus Estimate of $1,617.8 million (Read more: JetBlue Airways Earnings Beat, Revenues Miss in Q1).

JetBlue carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2. Allegiant Travel Company’s first-quarter 2017 earnings of $2.50 per share missed the Zacks Consensus Estimate by 8 cents. Moreover, earnings declined 41.7% from the year-ago figure due to higher costs.

Quarterly revenues increased 7.8% year over year to $375.8 million, edging past the Zacks Consensus Estimate of $375.1 million. Network growth aided the top line. Air traffic rose 7.5% year over year and capacity grew 12.5%. Load factor was 80.2%, down 380 basis points, as capacity expansion outweighed travel growth.

For the second quarter of 2017, the company expects cost per available seat mile (CASM), excluding fuel, to grow 13–15%. The company expects the increase in CASM to be primarily driven by the implementation of the new pilot agreement. Total revenue per available seat mile (TRASM) in the second quarter is likely to grow 1.5–3.5%.

3. Hawaiian Holdings’ first-quarter adjusted earnings of $1.04 per share beat the Zacks Consensus Estimate of 86 cents per share. Quarterly revenues of $614 million edged past the Zacks Consensus Estimate of $613 million. Higher passenger revenues boosted the top line. Both earnings and revenues increased on a year-over-year basis.

Operating revenue per available seat mile in the quarter climbed 7.6% year over year. The metric is projected to grow 5.5–8.5% in the second quarter of 2017. Capacity is projected to grow 3–5% in the second quarter. CASM, excluding fuel, is also projected to rise significantly in the quarter primarily due to the higher labor costs. Fuel cost per gallon (economic) is projected in the band of $1.65–$1.75.

4.  Following the ugly incident, which led to a passenger being forcefully removed from flight no 3411, United Continental announced that CEO Oscar Munoz is no longer guaranteed to be promoted to the post of Chairman next year as originally stated in the employment agreement. It is widely believed that the strong criticism faced by the company following the incident on Apr 9, led to the amendment of the agreement. According to the revised agreement, the determination of the Chairman was left to the “to the discretionof the board.”

5. American Airlines too found itself in the middle of a passenger fiasco. Reportedly, a female passenger on one of American Airlines flights was seen crying in a video, uploaded on social media by a fellow passenger, following an ugly altercation with one of the flight attendants. The attendant reportedly hit her with her baby’s stroller. The female passenger was subsequently escorted off the flight. The errant male flight attendant was “removed from duty.”


The following table shows the price movement of the major airline players over the past week and during the last 6 months. 


Past Week

Last 6 months
















































The table above shows that most airline stocks traded in the green in the past week. Over the course of the last five trading days, the NYSE ARCA Airline Index increased 1.2% to $113.78. Over the course of the last six months, the NYSE ARCA Airline Index appreciated 20%. Shares of United Continental Holdings appreciated the most (30%) during the period.

What's Next in the Airline Space?

The coming week will be flooded by earnings reports from major players in the airline sector like American Airlines, Southwest Airlines LUV and Spirit Airlines SAVE.

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Southwest Airlines Company (LUV): Free Stock Analysis Report
JetBlue Airways Corporation (JBLU): Free Stock Analysis Report
United Continental Holdings, Inc. (UAL): Free Stock Analysis Report
Spirit Airlines, Inc. (SAVE): Free Stock Analysis Report
Hawaiian Holdings, Inc. (HA): Free Stock Analysis Report
Allegiant Travel Company (ALGT): Free Stock Analysis Report
American Airlines Group, Inc. (AAL): Free Stock Analysis Report
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